A growth-oriented portfolio with strong US focus and tech sector concentration

Report created on Dec 28, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 65% in the Vanguard Total Stock Market Index Fund ETF, 20% in the Vanguard Total International Stock Index Fund ETF, and 15% in the Vanguard Information Technology Index Fund ETF. This composition leans towards growth, aligning with a growth profile. Compared to a typical balanced portfolio, which might include bonds or alternative assets, this portfolio is more aggressive. The high equity exposure can drive substantial growth but also increases volatility. Consider diversifying with non-equity assets to mitigate risk, especially during market downturns.

Growth Info

With a historical Compound Annual Growth Rate (CAGR) of 13.42%, the portfolio has performed well, outperforming many traditional benchmarks. However, the maximum drawdown of -34.04% indicates significant volatility, which is common in growth-focused portfolios. Understanding that past performance doesn't guarantee future results is crucial. This volatility might be acceptable for those with a higher risk tolerance and longer investment horizon. To reduce potential drawdowns, consider adding more stable asset classes or diversifying further across sectors and geographies.

Projection Info

The Monte Carlo simulation, which uses historical data to predict potential future outcomes, shows promising results. With a median projected return of 473.67% and a high probability of positive returns, the outlook is optimistic. However, it's important to remember that such projections are based on past data and do not account for unforeseen market events. Diversifying further or adjusting the portfolio to include less correlated assets could provide a buffer against potential downturns, ensuring a smoother performance over time.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's allocation is overwhelmingly in stocks, comprising over 99% of the total assets. While this can lead to high returns in a growth market, it also exposes the portfolio to significant risk during downturns. A more diversified portfolio might include bonds or other asset classes to balance this risk. By incorporating a mix of asset classes, you can potentially reduce volatility and improve risk-adjusted returns, aligning better with a diversified growth strategy.

Sectors Info

  • Technology
    38%
  • Financials
    13%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio is notably concentrated in the technology sector, which makes up over 37% of the total allocation. This focus can lead to higher returns during tech booms but also increases vulnerability to sector-specific risks, such as regulatory changes or tech market corrections. Balancing this with exposure to other sectors like healthcare or consumer goods could enhance stability. Sector diversification can help mitigate risks and provide more consistent returns across different market conditions.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with over 81% of the assets allocated there. This concentration might limit exposure to growth opportunities in other regions. While the US market is a strong performer, diversifying geographically can reduce risk and capture growth in emerging markets. Consider increasing allocations to underrepresented regions to enhance diversification and potentially improve long-term returns.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

Click on the colored dots to explore allocations.

The portfolio is well-positioned on the Efficient Frontier, indicating a strong risk-return balance given its current asset mix. The Efficient Frontier represents the optimal set of portfolios offering the highest expected return for a defined level of risk. Continuously assessing and rebalancing the portfolio to maintain this efficiency can help maximize returns while managing risk effectively. This approach ensures that the portfolio remains aligned with growth objectives and risk tolerance.

Dividends Info

  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.53%

The portfolio's overall dividend yield is 1.53%, with the Vanguard Total International Stock Index Fund ETF contributing the highest yield at 3.3%. While dividends can provide a steady income stream, the focus on growth suggests a preference for capital appreciation over income. For those seeking more income, reallocating to higher-yielding assets or funds could be beneficial. However, balancing growth and income is key to maintaining alignment with long-term investment goals.

Ongoing product costs Info

  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, thanks to the cost-efficient Vanguard ETFs. Low costs are a significant advantage as they enhance net returns over time. Keeping expenses low is crucial for long-term performance, as high fees can erode returns. Regularly reviewing and comparing fund expenses ensures that your portfolio remains cost-effective, supporting better growth prospects.

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